Put away the streamers and stop the chorus from singing “Happy Days Are Here Again,” at least for a while. Bloomberg reports that initial jobless claims rose again last week by 25,000 as more that 584,000 Americans applied for unemployment benefits for the first time. While the four-week average of initial jobless claims dropped, this increase hints at continued escalation of the national unemployment rate:
The number of Americans filing claims for jobless benefits last week held below levels seen in late June, before auto-related distortions set in, indicating firings are slowing as the economy stabilizes.
Applications rose by 25,000 to 584,000 in the week ended July 25, higher than forecast, figures from the Labor Department showed today in Washington. More than 600,000 claims were filed every week last month. The number of people collecting unemployment insurance decreased for a third week.
An analyst at Labor said distortions from the timing of auto-plant shutdowns “worked themselves out” of the data last week, returning claims to “trend.” While a resumption in hiring will be slow to materialize, payroll reductions are likely to slow as housing and manufacturing, the areas that led the economy into the worst recession in five decades, steady.
“Initial claims are still trending lower, which does suggest some improvement in conditions,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York, which had forecast claims would increase to 585,000. “What we are seeing is less firing.”
We may be seeing less firing, but we’re still seeing plenty of it. More than a half-million people had to apply for unemployment last week, which means that we’re not seeing new jobs created.
In fact, I’d challenge the notion that we’re seeing less firing. The four-week average hit 559,000, and last week’s number was 554,000. The latest figure will push the average higher in the next couple of weeks, which is what happens when the rate of claims increases.
Even if it did slow down, say to 500,000 a week, we’d bleed several million jobs by the end of the year. How exactly does that portend a recovery? In 2003, pundits derided the idea that we had turned the corner and begun a recovery, and at that time, the worst month for unemployment expansion was 669,000 newly unemployed (July). The last three months haven’t had less than 900,000, by the same measurement, but the media continues to talk up the idea that the recession has already ended.
Read the end of the Bloomberg article. While the analysts try to give this an optimistic spin, you’ll notice that they have now begun to say that the American economy is “nearing” bottom, and that the recovery will be next year, not in the third quarter of 2009, as the White House had predicted. Will that find its way into the national media?